Figure 9-8
Walton Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: $\begin{array}{lr}
\text { Direct materials } & £ 12 \
\text { Direct labour } & 36 \
\text { Variable manufacturing overhead } & 18 \
\text { Fixed manufacturing overhead } & 24
\end{array}$ The company has the capacity to produce 90,000 units. The product regularly sells for £120.
-Refer to Figure 9-8. If a wholesaler offered to buy 4,500 units for £100 each, the effect of the special order on income would be a

Question

Quizplus · Accepted Answer

The contribution margin per unit for the special order is £34 (£100 - £66 variable costs). For 4,500 units, the increase in income is £153,000 (4,500 units x £34). Fixed costs are not affected as the production is within capacity.

Figure 9-8 Walton Company Manufactures a Product with the Following

Figure 9-8
Walton Company Manufactures a Product with the Following